To us, it seems madness. To many Iranians, on the other hand, he may seem either to be a strong leader seeking to enhance Iran's power on the world stage (in which case he would hardly be the first head of government to gain support from appeals to imperial ambitions; we Americans have done the same thing), or to be a needlessly belligerent leader who hurts Iran but is not necessarily insane. Indeed, it would seem that many Mousavi supporters view Ahmadinejad in much the same light that many American liberals viewed George W. Bush: Not insane, but needlessly belligerent and undiplomatic, and a violator of constitutional rights.

(I am not going to argue about the accuracy of the views held by American liberals about Bush -- I state that merely to illustrate a parallel between how two factions in two societies view two leaders.)

they would take his side against that of potential freedom...and peace?

Yes. History has shown time and again that if they feel like an outsider is dominating them, most societies will prefer a domestic bastard to a foreign saint. They value Iranian sovereignty above Iranian liberal democracy; they would prefer Ahmadinejad, warts and all, to someone they perceive as an American puppet. "He may be a bastard, but he's our bastard."

That's why it was important that the U.S. not intervene on Mousavi's side. Mousavi needs to come to power, but he needs to come to power through purely Iranian efforts, or else the Iranian populace will reject him.